Project Management Business Assignment

Project Management Business Assignment

Programme

Diploma in Business (Marketing)

Unit Number and Title

Project Management Business Assignment

QFC Level

Level 5

Introduction

Project management is set of activities those are performed to achieved desired objectives. These activities may be application of processes, methods, talents, experience and other useful knowledge. The report will discuss the basics of project management and then viability of project for its success or failure. Key principles and practices of project management will be discussed in report along with key factors to influence the project accomplishment. Report will also determine the most acceptable form of organizational structure and procedures so that project can be accomplished successfully. Later report will conclude the project control and coordination techniques along with role and plan to manage leadership and human resource management. The report will also prepare the project plan and calculates the estimation on time and cost. The performance management will be used on project for high quality results. The report will define project change control procedures and effectiveness of prepared project in business processing of A2Z Construction. A2Z construction has four story building in present and planning to expand the structure in United Kingdom.

Task 1

1.1 Background and principles of Project Management

Project management refers to planning of the project, coordinating the project and controls the project from starting till end of the activities (Gido.et.al.2014). For both the projects A2Z construction has to follow these principles of Project management that are:

Project Structure- For any project there are three main points i.e. quality, time and available resources in the project. The structure of a project can be prepared by getting answer to the following question i.e. what has to be done in the project of renovation, when should be done and in which order and what is the status of the project.

Definition Phase- In this phase the project activities are defined and the resources required to complete the activities is defined. In this stage, the cost for completing each activity is defined. Budgeting is part of this phase.

Clear goals- the goal should always be defined, clear, measurable, and realistic and time bound in both the alternative projects. The project manager is held responsible for the achievement and failure of the goals of the projects.

Transparency- the status and goal of both the project should be transparent. There should not be any hidden information which affects the project at the end activity. Transparency could be achieved by giving a short discussion on cost and timeline in the meetings.

Risk recognition and responsibility of managers- every project whether it is a renovation of building or extending of building has an inherent risk inbuilt and this is normal. It is the responsibility of the project manager to calculate the risk and report to the management on timely basis.

1.2 Viability of project

The feasibility study is required to determine the profitability and scope of the project in business. Present business conditions and possible profits with strategies should be identified to measure the feasibility of project. There are two options available for A2Z constructions:

Project A: Extending the current four story building to a five story building

Project B: Buying and renovating an additional small office building space nearby

Feasibility for the above project would be calculated using NPV and Payback period. NPV is the difference between the cash inflows and cash outflows. Payback period is the time period in which the initial investment for the project would be required.

Project A

Payback Period: 3.467 years

Discounted Payback Period: 3.739 years

Return for the Cash Flow: 21.35% per year

NPV: $275,316.89

Cash Flow

Net Cash Flow

Discounted Cash Flow

Net Discounted Cash Flow

Year 0

$-400,000.00

$-400,000.00

$-400,000.00

$-400,000.00

Year 1

$110,000.00

$-290,000.00

$105,769.23

$-294,230.77

Year 2

$110,000.00

$-180,000.00

$101,701.18

$-192,529.59

Year 3

$110,000.00

$-70,000.00

$97,789.60

$-94,739.99

Year 4

$150,000.00

$80,000.00

$128,220.63

$33,480.64

Year 5

$150,000.00

$230,000.00

$123,289.07

$156,769.71

Year 6

$150,000.00

$380,000.00

$118,547.18

$275,316.89

Project B

Payback Period: 4.133 years

Discounted Payback Period: 4.540 years

Return for the Cash Flow: 13.35% per year

NPV: $175,316.89

Cash Flow

Net Cash Flow

Discounted Cash Flow

Net Discounted Cash Flow

Year 0

$-500,000.00

$-500,000.00

$-500,000.00

$-500,000.00

Year 1

$110,000.00

$-390,000.00

$105,769.23

$-394,230.77

Year 2

$110,000.00

$-280,000.00

$101,701.18

$-292,529.59

Year 3

$110,000.00

$-170,000.00

$97,789.60

$-194,739.99

Year 4

$150,000.00

$-20,000.00

$128,220.63

$-66,519.36

Year 5

$150,000.00

$130,000.00

$123,289.07

$56,769.71

Year 6

$150,000.00

$280,000.00

$118,547.18

$175,316.89

From the above tables it is clear that Project A is more feasible than Project B as it has lesser payback period and higher NPV.

Causes for Project Failure There are several reasons for a project failure. Some of the notable reasons are:

Poor Planning: For successful completion of project it is important that the planning for the project is appropriately done. The activities should be given sufficient time and resources to complete.

Poor Tracking: If tracking is poor, then a project manager would not be able to identify delay in project and would lead to project delay (Finnerty, 2013).

Poor leadership: Project manager is completely responsible for the success and failure of project. During the critical situations in the project, manager has to lead by example and make sure that the project is completed as per the expectation of the stakeholders.

Poor Communication: For a successful project, there should be proper communication between the management and project team.

1.3 Principles behind Project Management systems and Procedures

Project management involves principles, practices, guidelines and procedures to achieve project objectives (Turner 2016). It involves various activities such as scheduling, cost and budget, proper resource utilization, quality management, risk management, decision making. These all activities are basically the principles of project management. Every organization has project management involve in their business operations. Without project management the firm would be disorganize and will not function properly. And every firm or industry has their own management of project team which functions according to the need of the project. For this, the managers should know the importance of project management which helps them to achieve the cost and quality of the project.

The importance of project management in both the project of A2Z construction is:

Project management provides vision and direction to the managers (Newton 2015). The project management team is held responsible for the achieving the objectives of the projects. It includes identifying what the project required and its objectives with keeping in minds the demand of the stakeholder. The project management is also important for controlling the cost, providing better quality with time limits. The main reason for the growing importance is that of high competition among companies which delivering a unique product or service quality within the budgets.

The project management at A2Z construction will have a project team which will comprise of all the necessary team members required for planning and execution of the project. The team would be headed by a project manager. A project steering committee would comprise of the project stakeholders, project sponsor and project manager. Project steering committee would review the work on timely basis to avoid any problems in future, review the budget standards on monthly or quarterly basis depending upon the time of the project, reschedule the project when necessary, review the schedule situation according to schedule and if not completed take the help of the staff who are assigned to see the activity, evaluate the critical path, adjust the work plan and communicate the schedule and risk associated to the projects for the future references (Turner 2016). Following is the project structure for the A2Z constructions.

The last phase in the project is project termination. It starts after the completion of the project and ends after finishing up of certain actions to close the project. Termination of project is important for gaining the experience for the future projects so that the same mistakes are not repeated. The key elements involved in terminating the project are organizing and filling project repots, making up of final payments, conducting the meeting with contractors and the organization for post evaluation of project.

The filling in terminating the project is an important element as it comes in checklist form where criteria are met with the desired outcomes. The filling should be in the form of flowcharts, schedules and diagrams, reports and data etc to be used for future projects in cost estimation and scheduling. Another important element is payment clause in both the projects for these terms and conditions of the projects should be properly framed in the beginning of the projects.

Post project appraisal involves determination of the project time, budget and deliverables to meet the standard of the project. Post project appraisal is done by the project manager and he identifies the final cost of the project then compares it with the authorized or standard cost. He also appraises the actual completion date of the project with the actual date given by the management and variances and explanations if any. The actual deliverables is to be compared with given standard deliverables. And any other important element in the project which should be necessary and how it is to be embedded for future projects

Task 2

2.1 organisational structures, roles and responsibility of participants within a project

A2Z construction firm involves both job roles and operating and reporting link between and within these roles. The common organisational structures are- functional design structure, departmental horizontal structure, inters departmental structure and last directional communication structure. The most appropriate structure would be functional design structure in this firm. This structure is an example of traditional hierarchical structure. It involve separation of departments and their functions and controlling, well defined top down communication. For example the duties flow in particular direction from owner to management team to project manager and finally to construction employee. The main purpose to use this structure is requires same knowledge of skills and expertise and increases operating efficiency. Following figure shows the functional design structure:

The roles and responsibilities of the participants in the given project of A2Z construction are:

Role of Project Manager- In construction firm, the role of project manager is to initiate the planning process of the project and then plan and define the scope of the project, execute the planned project to the lower level i.e. to workers and other staff, validate the project and last evaluate the project with the desired outcomes (Kerzner, 2013)

Role of suppliers- in the construction industry the role of suppliers is of vital importance. The supplier’s delivery of construction materials etc at the given time, payment schedule, lead time periods etc should be kept in the mind. There should be proper tie ups with the supplier company’s.

Role of workers- worker participant play the major role. They are the people who give expected result to the planned work. The key asset to construction industry without them the work could not be completed. In short the productivity of the firm would be affected greatly.

The role of the project manager for job specification:

Qualification

Bachelor’s degree

Experience

Having experience of 1 year or more on construction related projects

Requirements

Co-ordinate the construction activity

Decision making

Manages time restrictions

Have skills on cost control and maintaining quality of the project.

2.2 Control and Coordinate a Project

The project to design new building which is extension to present structure needs effective control and coordination technique. One of control and coordination technique which can be used by A2Z construction is critical path analysis (CPA) in which all the project activities are identified for their durations and efforts. A2Z construction needs to determine the longest and time consuming activities of projects so that plan can be changed to complete such activities into modules. Modularization in CPA helps to reduce the complexity of plan of project activity and increases the success rate of activity. Longer activities in project may result in indeterminate business effort, time and cost (Mubarak, 2015).

A2Z construction can use CPA to find the critical paths in accomplishment of project. Top management can break the large activities into manageable sub groups so that proper utilization of human resources and other assets can be made. Module also helps to manage the work quality and performance effectively. A2Z Construction needs to coordinate the business with critical path analysis to reduce the cost and time to accomplish the project. It also sequences the activities according to their priority and significance in development work (Herrer?.et.al.2011).

2.3 Requirements and qualities of project leader

The project leader of A2Z construction should possess the following qualities:

A leader should have excellent communication and qualified skill

Leader should be competent to take any responsibility in ever changing environment. It’s should not be necessarily based on the technical abilities only of the leader (Hwang.et.al 2013).

Leader should have ability and skills to delegate the work and responsibility to the workers. The workers should trust the leader. Without trust a leader is often failed as a leader.

In contingencies leader rise up with new opportunities and brings a new picture that pulls the project. Leader should be cool under pressure (Hwang.et.al 2013).

A leader should possess the quality of problem solving skills. For example, in A2Z construction, if the workers are on leave or absent on any day due to any reason and there is a deadline to complete the work on the same day in that situation the leader should immediate give a fresh and creative response to the problem.

Leader should be team builder. The purpose of the team is to achieve the common objective of the project. He should know the capability of each worker and assign them the right work in their hands (Hwang.et.al 2013). For example, in A2Z construction, a leader should assign the work to that worker who has capability of doing the task faster and efficiently.

Leader should be enthusiastic and confident in his work. if the leader shows his enthusiasm in his work and ready for any challenges then automatically worker and his staff would also accept the changes in the firm. For example, in the given A2Z firm, there is a change in technology due to which the staff cannot adapt the changes as early. The leader has to show enthusiasm in learning the new technology and provide the training through technical staff to other staff to use the technology ( Garton and McCulloch, 2012).

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2.4 Plan and specify the human resources and requirements for a project

There are many resources required for the project such as capital, equipment, material, information and the most important human resource with skills and competencies. The lack of resource would limit the flexibility of the project. Allocation of resources can be done through key factor or critical path technique by giving priorities to the resources. The main aim is to minimise the project duration and maximise the use of resource available.

The most important resource for the construction project is human resource. The project would require following human resources:

Project Manager

Architect

Civil Engineer

Supervisor

Skilled Labour

Unskilled Labour

Back office staff

A2Z construction requires experienced human resource that can be hired through placement agency or third party vendor. Today hiring and retaining the human resource is a main critical process of the project. Human resource management can use the technique of Responsibility assignment matrix to ensure each project activity with specified resources. The technique focus on RACI chart that stands for Responsible, Accountable, Consult and Inform. The chart shows the project activities and individual accountable to each activity. For large construction there may be more than one individual to the project. Multiple individual or group should be consulting and informed to the respective management team.

Task 3

3.1 Project Plans and establish the Project Organisation

The organization may follow the project plan to achieve the desired results with investment. The project plan is developed using Microsoft project. Gantt chart will be used for project plan. Gantt chart shows the list of activity with expected start and completion time (Kerzner, 2013). Project plan is shown below:

The network diagram for the project is shown below:

The project can be organized in number of activities those can be sequence according to their priority and significance in development work. A2Z construction can calculate the earliest start time and latest finish time on each activity to determine the network diagram for project (Krähmer and Strausz, 2011). Network diagram helps to achieve high performance within given time as activities are manageable and sequential according to requirement. Following network diagram can help the organization to organize the project effectively

3.2 Project Scheduling, Estimating and Cost Control techniques

The project can be scheduled according to defined project plan. The cost and time estimation is required to achieve the project within budget and efforts so that market advantages can be meet. Organization may use project plan to start the project effectively with desired outcome. The estimation of cost and time can be achieved with the control technique like PERT (Program Evaluation and Review Technique). PERT helps to control the project under the three main factors: time, cost and technical effort. Most of time, PERT is compared with critical path analysis for effectiveness and high productivity (Larson and Gray, 2011). Organization can use PERT on each activities in plan to determine the cost and time estimations in project.

Activities those are time consuming and costly can be analysed in between to replace with alternatives so that project’s overall performance can be managed. PERT helps organization to take appropriate decision with proper use of time and resource in workplace for performance. With the help of PERT organization can reduce the probability of failures in project as each activity can be measured accurately for time and cost. Time is at core of PERT to estimate the success of project whereas activities are treated as milestone of project to achieve within time (Vanhoucke, 2012). The bad performance is one activity influence the overall time and cost in project. Following formulas can be used to manage the time:

Time = (P + M + O)/3 where P for pessimistic, m- most likely and O-optimistic

Average time= (P+ 4M + O)/6

Standard deviation= (P – O)/6

Variance= [(P – O)/6]2

3.3 Methods to measure project performance

The performance of the project can be measured with two types of methods:

Revenue over Investment (ROI): it determines the success of project on the basis of investment. The revenue from the project must be higher from the investment for its success in business. This method is effective to determine the financial strengths and investment with projects. Al though, this is not so effective because the outcome from the project is most of time unpredicted during development and the success rate also depends upon the market conditions. Still, it provides good analysis for financial profits and benefits from project (Sprecher, 2012).

Stakeholder Support & Engagement: The success of project can be measured with the engagement of stakeholders and their support to carry it in market advantages. A2Z Construction can use this method to determine the success of project more accurately because the contribution of stakeholders can be measured in investment and interest with project. However, it is difficult to gather the required information correctly (Kerzner, 2013).

Both the project performance measurement methods are effective. Organization can select later one to determine the success more effectively as it includes all the important aspects of projects as part of contribution in success.

3.4 Project Change Control Procedures and Project Evaluation

The changes and enhancement in projects are controlled by change management board of organization. Board of organization needs to determine the changes those can enhance the performance as well as quality of project. Board of change management is liable to control the procedure of changes in project as project changing in between the development may ruin the already done work. Changes must be identified and evaluated before the starting of procedures on plans so that cost and time can be saved. Expected changes should be submitted to board of change management and then review carefully for the scope and benefits with changes (Stark, 2015). The return form changes must be higher than cost on changes so that changes can be made effectively.

The project is implemented successfully under the estimated cost as there was no rollback and time consumption on decision making for lengthier activities. The activities are divided into manageable tasks so that performance is achieved according to plan. A2Z organization has achieved the desired benefits with project as the cost of project was under estimation and possible throughputs from project over time. The project is effective in term of human resource managementand business regulations. Organization has achieved the efficiency in business process control and liability as task in organization are grouped to control under specific departments and leaders. Management has provided effective support and engagement in project success (Wysocki, 2011).

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Conclusion

The report has discussed the basics of project management along with viability of project to develop. Key project management principles and procedures are identified with the description on key factors to influence the project success. The report has concluded the contribution of organizational units along with role of control and coordination techniques. Human resource management and project leaderships are analysed related to project. Later report has prepared the project plan and defined the schedule and estimation to complete the project. Cost and performance is measured with techniques like PERT. Also the project has been evaluated for its success in organization. Project change control management has been discussed along with the role of management of A2Z Construction.